Services PMI® at 52%; August 2025 ISM® Services PMI® Report

Business Activity Index at 55%; New Orders Index at 56%; Employment Index at 46.5%; Supplier Deliveries Index at 50.3%

TEMPE, Ariz., Sept. 4, 2025 /PRNewswire/ — Economic activity in the services sector grew in August for the third consecutive month, say the nation’s purchasing and supply executives in the latest ISM^® Services PMI^® Report. The Services PMI^® indicated expansion at 52 percent, above the 50-percent breakeven point for the 13th time in the last 14 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management^® (ISM^®) Services Business Survey Committee: “In August, the Services PMI^® registered 52 percent, 1.9 percentage points higher than the July figure of 50.1 percent and in expansion territory for the third month in a row. The Business Activity Index remained in expansion in August, registering 55 percent, 2.4 percentage points higher than the reading of 52.6 percent recorded in July. This index has not been in contraction territory since May 2020. The New Orders Index also remained in expansion in August, with a reading of 56 percent, up 5.7 percent from July’s figure of 50.3 percent. The Employment Index was in contraction territory for the third month in a row and the fifth time in the last six months; the reading of 46.5 percent is 0.1 percentage point higher than the 46.4 percent recorded in July.

“The Supplier Deliveries Index registered 50.3 percent, 0.7 percentage point lower than the 51 percent recorded in July and matching the June reading. This is the ninth consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM^® PMI^® Reports index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index registered 69.2 percent in August, a 0.7-percentage point decrease from July’s reading of 69.9 percent. The index has exceeded 60 percent for nine straight months, its longest such streak since 30 consecutive readings above 60 percent from October 2020 to March 2023.

“The Inventories Index was in expansion territory in August for its third month in a row, registering 53.2 percent, an increase of 1.4 percentage points from July’s figure of 51.8 percent. The Inventory Sentiment Index expanded for the 28th consecutive month, registering 55.5 percent, up 2.3 percentage points from July’s figure of 53.2 percent. The Backlog of Orders Index was in contraction territory for the sixth month in a row, registering 40.4 percent in August, 3.9-percentage points below the July figure of 44.3 percent and the lowest reading since May 2009 (40 percent).

“Twelve industries reported growth in August, one more than in July. The Services PMI^® has expanded in 11 of the last 12 months, but the August reading of 52 percent is 0.4 percentage point below the 12-month average reading of 52.4 percent.”

Miller continues, “August’s Services PMI^® level showed greater strength, driven by faster expansion rates for the Business Activity and New Orders indexes. Offsetting these positive indicators, however, are continued contraction in the Employment Index, a 16-year low for the Backlog of Orders Index, and the Prices Index remaining near 70 percent. Commentary once again was led by respondents’ increasing citations of tariff impacts, with some indication that business activity and imports are being driven by an attempt to get ahead of additional price increases while preparing for the holiday peak season.”

INDUSTRY PERFORMANCE
The 12 services industries reporting growth in August — listed in order — are: Information; Wholesale Trade; Arts, Entertainment & Recreation; Mining; Transportation & Warehousing; Educational Services; Professional, Scientific & Technical Services; Retail Trade; Utilities; Health Care & Social Assistance; Public Administration; and Real Estate, Rental & Leasing. The four industries reporting a contraction in the month of August are: Accommodation & Food Services; Management of Companies & Support Services; Other Services; and Construction.

WHAT RESPONDENTS ARE SAYING

• “We are starting to see the impact of tariffs on the cost of imported goods. For our company, this is primarily for goods from Asia and South America. We expect to see the full effect of tariffs in our cost of goods sold by October.” [Accommodation & Food Services]
• “Tariffs are starting to become a factor in our pricing to specific markets. We are an importer from Europe. The intention is not to pass on these costs, but it’s getting harder as this goes on.” [Agriculture, Forestry, Fishing & Hunting]
• “Tariffs continue to loom, and providers are starting to include references to tariffs when requesting price increases.” [Finance & Insurance]
• “While our overall spending approach is to remain cautious while waiting out the effects of the new tariff policies on commodity pricing, we expect fiscal year 2026 to be positive.” [Management of Companies & Support Services]
• “Business continues to remain flat.” [Other Services]
• “Business growth continues to be strong as companies work to understand costs of expanding U.S. operations.” [Professional, Scientific & Technical Services]
• “Locally, prices have and are continuing to rise on goods and services that do not appear to be directly impacted by tariffs.” [Public Administration]
• “Our company had the strongest quarter in its history since it became a public company in 2020. Revenue is increasing due to M&A activity and in spite of a slow housing market and increasing tariffs.” [Real Estate, Rental & Leasing]
• “It’s all about country specific tariff management. All decision making is currently dominated by tariff considerations.” [Retail Trade]
• “Business overall is tightening. Most customers are extremely price conscious.” [Transportation & Warehousing]

ISM^® Services PMI^® Report data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. ISM^® Manufacturing PMI^® Report data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes.
*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY

Commodities Up in Price
Aluminum (4); Aluminum Products (3); Copper Products; Electrical Components; Equipment; Labor; Maintenance; Office Supplies; Software (2); Software — Licensing (3); Software Maintenance (2); and Steel Products (8).

Commodities Down in Price
Diesel Fuel (6); and Gasoline (6).

Commodities in Short Supply
Labor — Construction.

Note: The number of consecutive months the commodity is listed is indicated after each item.

AUGUST 2025 SERVICES INDEX SUMMARIES

Services PMI^®
In August, the Services PMI^® registered 52 percent, a 1.9-percentage point increase compared to the July reading of 50.1 percent. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.

A Services PMI^® above 48.6 percent, over time, generally indicates an expansion of the overall economy. Therefore, the August Services PMI^® indicates the overall economy is expanding for the 63rd straight month. Miller says, “The past relationship between the Services PMI^® and the overall economy indicates that the Services PMI^® for August (52 percent) corresponds to a 1.1-percentage point increase in real gross domestic product (GDP) on an annualized basis.”

SERVICES PMI^® HISTORY

Business Activity
ISM^®‘s Business Activity Index remained in expansion territory with a reading of 55 percent in August, 2.4 percentage points higher than its reading of 52.6 percent recorded in July. The Business Activity Index has not been in contraction territory since May 2020. Comments from respondents include: “Very good movie content drove higher volumes” and “We’ve seen an increase in work activity heading into the pre-holiday season.”

The nine industries reporting an increase in business activity for the month of August — listed in order — are: Mining; Information; Wholesale Trade; Arts, Entertainment & Recreation; Transportation & Warehousing; Health Care & Social Assistance; Professional, Scientific & Technical Services; Retail Trade; and Educational Services. The three industries reporting a decrease in business activity for the month of August are: Real Estate, Rental & Leasing; Construction; and Accommodation & Food Services. Six industries reported no change in business activity in August.

New Orders
ISM^®‘s New Orders Index registered 56 percent in August, 5.7 percentage points higher than the reading of 50.3 percent reported in July. The index has been in expansion territory in 30 of the last 32 months. Comments from respondents include: “Data center construction is driving the increase in order activity” and “Getting merchandise into the U.S. ahead of effective dates of tariff increases.”

The 13 industries reporting an increase in new orders for the month of August — listed in order — are: Wholesale Trade; Educational Services; Arts, Entertainment & Recreation; Information; Transport